The mahanagar gas limited call option seems to be moving opposite to the share why is that?
As it is april’s option, there is no volume in the stock’s option. If u check the market depth, you will see that buyer is at 70 and seller is at 111
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Thank you for replying. Can you explain what this means.
It means it is illiquid, not enough sellers/buyers. The gap between buyer and seller prices are too huge.
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Thank you Jacob.
This is the 1st F&O stock I have purchased.
If I understand the varsity correctly MGL 700 CE option means that I have the right to buy MGL stock at 700/share. I bought it when MGL was below 700.
I cannot figure out how to excercise that option.
As I understand it I SHOULD be able to buy 600 shares of MGL @rs 700 and immediately sell them (delivery) for Rs 770. Giving me a profit of 42000, while the option value is only 10800
You can only exercise options on the expiry of the contract. In this case, after market close on 28th April.
Please note, there is a practical difference in the theory at Varsity and settlements in derivatives contracts.
If the contract expires in-the-money, you need to take delivery first.
Which would mean you need to have 600x700 = Rs 420000 in you account.
You can sell only after the shares are in your demat account.
Please consider squaring off your open position before expiry to avoid all the hassles.
If your CE is in profit, sell it off anytime when there is a buyer at the desired price.
Finding buyers in illiquid options is not easy.
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For how much did you buy the MGL Apr 700 CE option?
Better square it off rather than getting into the hassle of taking delivery (you would need ₹700 x 600 margin available on expiry day).
That trade happened on 17/03/22.
When I checked now, buyers at 86, sellers at 93!
Screenshot_20220323-203239|250x500
You are in luck. Check it out tomorrow!
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Thank you alwaysShri for the cogent and detailed reply.